Government launches Future Fund scheme for UK startups
20 May 2020
The government’s £500 million Future Fund is open for applications, with innovative and high-growth British businesses able to secure investment to help them through the Coronavirus outbreak.
UK-based companies can now apply for a convertible loan of between £125,000 and £5 million, to support continued growth and innovation in sectors as diverse as technology, life sciences and the creative industries.
The Chancellor of the Exchequer, Rishi Sunak, said: “Our start-ups and innovative firms are one of our great economic strengths, and they will help spur our recovery from the pandemic.
“The Future Fund will support firms across the UK to get through the pandemic by stimulating investment, so that they can continue to break new ground in technology and innovation.”
Ritam Gandhi, Founder and Director of Studio Graphene said: “Startups have had to wait their turn, but it is great that the much-anticipated Future Fund is now open for applications. It is a hugely significant moment – many innovative early stage businesses are on the brink of closure and require loans, grants or investments if they are to weather the storm. Previous government-backed financial schemes had largely overlooked startups, with their loss-making nature effectively blocking fledgling companies from accessing the support that had been made available to more established SMEs.
“As a startup and a business that works with other entrepreneurs looking to get new ventures off the ground, I really hope the Future Fund will give early stage businesses the support they need to still pursue ambitious growth plans. After all, innovative startups are integral to our economy, and require an environment that will foster their growth. Make no mistake, if we do not support our most promising startups now then the private sector will be massively damaged in the years to come.”
Nic Redfern, Finance Director at KnowYourMoney.co.uk, said: “The Future Fund is perhaps more complicated than the other state-backed financial support schemes that have been created to help UK businesses through the pandemic. On the one hand, early stage businesses are undoubtedly in need of urgent help, so the fund will be welcomed by many entrepreneurs; however, as we are now in the eighth week of the lockdown, it has taken too long for the initiative to launch. Moreover, there are understandable concerns about several elements of the scheme.
“The fact it is not EIS-compatible has already caused grumblings of displeasure from investors and startups alike. Meanwhile, the fact a loan can be converted into ‘discounted equity’ if a startup cannot repay it within three years poses interesting questions around business valuations and how the Government will eventually realise the value of its equity in countless British businesses. Startups must tread carefully and thoroughly research the Future Fund before jumping ahead with any applications.”
The Fund will be open until September and is delivered in partnership with the British Business Bank.
Oliver Dowden Secretary of State for Digital, Culture, Media and Sport said: “The UK is a global tech and creative hub. We are an unashamedly pro-tech government and are supporting high-growth businesses through this challenging period so they can prosper and succeed.
“The tech sector has played a crucial role throughout the pandemic and these innovative firms will be key to driving growth through our recovery.”
Business Secretary Alok Sharma said: ““Britain is an innovation powerhouse and helping our cutting-edge companies of the future get the cash they need during this difficult time is a vital part of getting the UK economy up and running again.”